North American Investment Grade CDS Index 92.71 bps -.55%
European Financial Sector CDS Index 101.67 bps +6.17%
Western Europe Sovereign Debt CDS Index 159.67 bps +1.48%
Emerging Market CDS Index 197.07 bps -2.56%
2-Year Swap Spread 16.0 unch.
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .12% +1 bp
Yield Curve 228.0 +4 bps
China Import Iron Ore Spot $150.20/Metric Tonne unch.
Citi US Economic Surprise Index +12.70 +2.7 points
10-Year TIPS Spread 2.19% +2 bps
Overseas Futures:
Nikkei Futures: Indicating +130 open in Japan
DAX Futures: Indicating +32 open in Germany
Portfolio:
Higher: On gains in my Tech, Retail and Medical long positions
Disclosed Trades: Added to my (SXCI) long, took profits in another long
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs despite recent equity gains, fears over a possible "sell the news" reaction to the election/Fed announcement and euro sovereign debt concerns. On the positive side, Bank, Steel, Paper, Internet, Semi, Disk Drive, Networking, Gaming, Road & Rail and Airline shares are especially strong, rising 1.0%+. (XLF) has been relatively strong throughout the day. Cyclicals are outperforming. Lumber is rising +.6% and Gold is falling -1.15%. Oil Tanker rates are soaring another +18.75% and have risen +58.33% in 5 days. The Citi US Economic Surprise Index is now at the best level since early June. The 10-year yield is rising +3 basis points to 2.62% and the yield curve continues to steepen. On the negative side, Homebuilding, Education and Coal shares are under pressure, falling more than 1.0%. The Portugal sovereign cds is gaining +3.49% to 415.14 bps, the Ireland sovereign cds is gaining +6.24% to 545.72 bps and the Greece sovereign cds is gaining +2.4% to 870.75 bps. The bears inability to gain any traction on an expected "sell the news" reaction to today's developments is a bit surprising and shows the market's ongoing resilience. If an equity sell-off does not materialize very soon, I suspect that another push higher in the major averages will commence on short-covering as hedge funds remain poorly positioned for equity strength. I expect US stocks to trade mixed-to-higher into the close from current levels on tax policy/election optimism, less economic fear, buyout speculation, investment manager performance angst, diminishing financial sector pessimism, short-covering and earnings optimism.
For the most part, it was party time on the stock exchanges today.
Yet, I believe A Rally Top Was Achieved On November 3, 2010, As Equities And Bonds Both Moved Higher With The Announcement Of QE2, And Now A Currency Sell Off Is Imminent
The currency traders sold the Yen, FXY, today, to 121.91, as the bond vigilantes called the Interest rate on the US Government Bond, $TYX, higher, to 4.053%, which caused the longer out maturity US Government debt, that is, the 10 to 20 Year US Government Bonds, TLT, and the Zeroes, ZROZ, to fall sharply lower.
Fan Yang of FXTimes writes that the EUR/JPY pair exploded, after breaking out of a declining channel yesterday. After a quick throwback in the 4H chart that failed to break below the 50 SMA, the market shot up breaking the 114.00 level and 61.8% retracement (a strong level of resistance)
The Euro, FXE, rose 0.67%, to close at 140.70 at the top of a broadening top pattern, suggesting that it has maxed out.
Bonds, BND, rose to a new high and manifested a massive questioning harami, suggesting that Total Bonds has topped out.
Today, November 3, 2010, was a rally high for the worlds stock and bond traders as they celebrated the flow of investment liquidity from the US Central Bank and carry trade investing.
China small caps, HAO, was one of the celebrators, rising 1.0% to close at 122.19. And, Poland, EPOL, a favorite for yen carry traders, rose 1.2%. And mortgage finance, KME, got the investment cool aid as well, rising 2.7%
Today was a disaster for those invested long in US Sovereign debt, TLT as the bond vigilantes called the longer out rate higher, as the US Central Banks QE 2 constitutes monetization of debt.
The spigot of investment liquidity from the US Central bank has turned toxic, as it is now monetizing debt.
And the spigot of investment liquidity from carry trade investing will be turned off as carry traders sell off the major currencies, DBV, and emerging currencies, CEW, given that they are over-bought.
1 comment:
For the most part, it was party time on the stock exchanges today.
Yet, I believe A Rally Top Was Achieved On November 3, 2010, As Equities And Bonds Both Moved Higher With The Announcement Of QE2, And Now A Currency Sell Off Is Imminent
The currency traders sold the Yen, FXY, today, to 121.91, as the bond vigilantes called the Interest rate on the US Government Bond, $TYX, higher, to 4.053%, which caused the longer out maturity US Government debt, that is, the 10 to 20 Year US Government Bonds, TLT, and the Zeroes, ZROZ, to fall sharply lower.
Fan Yang of FXTimes writes that the EUR/JPY pair exploded, after breaking out of a declining channel yesterday. After a quick throwback in the 4H chart that failed to break below the 50 SMA, the market shot up breaking the 114.00 level and 61.8% retracement (a strong level of resistance)
The Euro, FXE, rose 0.67%, to close at 140.70 at the top of a broadening top pattern, suggesting that it has maxed out.
Bonds, BND, rose to a new high and manifested a massive questioning harami, suggesting that Total Bonds has topped out.
Today, November 3, 2010, was a rally high for the worlds stock and bond traders as they celebrated the flow of investment liquidity from the US Central Bank and carry trade investing.
China small caps, HAO, was one of the celebrators, rising 1.0% to close at 122.19. And, Poland, EPOL, a favorite for yen carry traders, rose 1.2%. And mortgage finance, KME, got the investment cool aid as well, rising 2.7%
Today was a disaster for those invested long in US Sovereign debt, TLT as the bond vigilantes called the longer out rate higher, as the US Central Banks QE 2 constitutes monetization of debt.
The spigot of investment liquidity from the US Central bank has turned toxic, as it is now monetizing debt.
And the spigot of investment liquidity from carry trade investing will be turned off as carry traders sell off the major currencies, DBV, and emerging currencies, CEW, given that they are over-bought.
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